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Spain's Fiscal Package Fosters 'Entrepreneurial Culture'

30 May 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Source: Ulrika Lomas (, Brussels)

The Spanish Government has unveiled details of its Entrepreneur Support Act, providing for a raft of fiscal measures designed to facilitate the creation of new companies in Spain, and to support the country's self-employed and small- and medium-sized enterprises (SMEs).

In the area of fiscal support, the new legislation provides that the self-employed and SMEs that are not subject to the modular tax system and with turnover of less than EUR2m (USD2.6m) will not have to pay value-added tax (VAT) on invoices until they are actually settled. The measure is to apply from January 1, 2014, and is expected to benefit almost 1.3 million self-employed individuals and over 1 million SMEs in Spain.

The draft law provides for the introduction of a fiscal incentive for corporations electing to reinvest part of their corporate profits in the business. Consequently, companies with a turnover of below EUR10m will be able to deduct from tax up to 10 percent of profits obtained in the tax year in which they are reinvested in economic activity. This initiative is predicted to benefit 200,000 self-employed taxpayers and 185,00 SMEs.

The Government also aims to promote the concept of "business angels," namely individuals that invest in a company or in a business project of a third party. The decision to contribute capital and/or business knowledge to a new company will enable individuals to deduct 20 percent of their State Personal Income Tax quota. In addition, all profits obtained from the activity are tax-exempt if reinvested in other newly incorporated companies.

To support funding for entrepreneurs, internationalization covered bonds have been created. These are assets secured by loans earmarked for the internationalization of companies or for exports.

Other key non-fiscal measures contained in the legislation include plans to create the statute of "limited liability entrepreneur," intended to ensure that the self-employed no longer have unlimited liability for their business debts. Furthermore, their primary residence will be exempt from liability, provided that the value of the property is not in excess of EUR300,000.

Finally, the legislation creates the concept of the limited liability capital growth company, which allows companies to be set up with share capital of less than EUR3,000. Under the provisions, the company is required to contribute 20 percent of its corporate profits until such time as the capital required by law is fully paid.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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